Analysys Mason: The Wi-Fi Calling Services Opportunity

A new report by Stephen Sale, Practice Head, Consumer services, Analysys Mason finds that "Wi-Fi calling lowers the barriers to entry to mobile services, but it also provides more-established operators with a much-needed stimulus to evolve their service offerings.

Wi-Fi calling, particularly in its native implementations (that is, adding the capability to native diallers on handsets), brings the following three player types into direct competition, each with the objective of full voice service substitution. 

See "Wi-Fi calling services: assessing the market opportunity" - here.

[Analysys Mason]: QoE is at the Center of Turning the Growth of OTT Video

A new report by Gareth Williams, Manager, Custom Research, and Martin Scott, Principal Analyst, Analysys Mason, finds that "Communications service providers (CSPs) have multiple options for turning the growth of over-the-top (OTT) video consumption to their advantage. Quality of Experience (QoE) lies at the centre of achieving excellence in the key categories of approach that we identify in this report" 

All approaches ultimately need to deliver a high quality of experience (QoE) to users, and this is particularly important for launching OTT video services, partnering with OTT video providers and offering solutions to OTT video providers.

CSPs should:

• Consider investing in platforms to better support OTT video partners’, as well as users’, needs in order to increase revenue share
   
• Add wholesale service capability to content distribution networks (CDNs) used for internal use – or develop partnerships with CDN providers
   
• Extend the reach of their own OTT video services if they have access to unique or compelling content

See "Over-the-top video: a threat and an opportunity for communications service providers" - here.

Analysys Mason's Recommendations to CSPs & Vendors for the $9.2B SDP Market

A new report by Glen Ragoonanan [pictured], Principal Analyst. and Gorkem Yigit, Analyst, Analysys Mason finds that:

• The service delivery platforms (SDP) market will grow from USD5.7 billion in 2014 to USD9.2 billion in 2019, at a 10% CAGR, thanks to the shift from spending on infrastructure to spending on SDP for existing and new digital services
   
• The main growth drivers are increased video consumption and the growing number of connected smart devices (customers often have more than one)
   
• The availability and affordability of virtualised SDP solutions will drive spending despite lower price points than traditional SDP systems.

Analysys Mason's Recommendations for CSPs:

1. CSPs need to develop new ‘personalised’ (customisable) digital services using an integrated SDP approach
    
2. CSPs should invest in SDPs that optimise and monetise video services and in scalable SDM systems for IoT
    
3. CSPs should virtualise SDP network functions to improve scale and reduce costs

And for vendors:

1. Suppliers should incorporate NFV and SaaS into their CSP SDP solutions to enable faster and more cost-effective delivery of new digital economy services
    
2. Next-generation unified communications (voice, messaging and video) service delivery should be the foundation of TAS offerings
    
3. Growth in video and IoT devices will drive the need for scalable CMD and SDM platforms, increase the number of policy management use cases and investments, and drive supplier ecosystem growth or M&A

See "Service delivery platforms: worldwide forecasts 2015–2019" - here.

[Analysys Mason]: No Change in the $5.8B SDP Market Leaders

A new report by Glen Ragoonanan [pictured], Principal Analyst, and Gorkem Yigit,Research Analyst, Analysys Mason finds that "The service delivery platform market generated USD5.8 billion in revenue worldwide in 2014, up 11% from USD5.2 billion in 2013. LTE's impact on the overall service delivery platform (SDP) market increased, first in subscriber data management (SDM), then policy management (PM), followed by mobile content management and delivery (CMD), and finally, telecoms application servers (TAS) for mobile data and VoLTE services. Virtualised SDPs were being introduced in 2014.

.. the top-five SDP vendors were unchanged. Amdocs returned to the top six, thanks to a severe decline in Cisco's fixed CMD (FCMD): 

• Ericsson retained its leadership with 9% year-on-year revenue growth – primarily in the content management and delivery (CMD) sub-segment thanks to its acquisitions of Azuki Systems, Fabrix Systems, as well as Microsoft Mediaroom, which forms part of its Media Delivery Network (MDN) solution portfolio. Its other SDP revenue grew, though slower than the overall SDP market
    
• Huawei Technologies achieved the highest organic growth – 30% year-on-year – thanks to strong growth in the number of LTE subscribers in China because all three major communication service providers (CSPs) are rolling out LTE. It continued to win SDP business from other vendors in EMEA
   
• Nokia Networks’ revenue only grew by 5% year-on-year, compared with 11% for the overall SDP market. It remained the SDM leader, enjoying wins worldwide. Its acquisition of Alcatel-Lucent could make it the SDP market leader
    
• Alcatel-Lucent’s revenue growth declined by -7% year-on-year as it restructured and refocused on network virtualisation and VoLTE, which were not significant drivers of SDP spend in 2014
    
• Oracle had low 4% year-on-year organic growth, compared with 35% inorganic growth in 2013, when it acquired Acme Packet and Tekelec
   
• Amdocs’ SDP revenue growth was flat in 2014, which reduced its market share, compared with 2013. It re-entered the top-six thanks to Cisco’s decline in fixed CMD (FCMD).

See "Service delivery platforms: worldwide market shares 2014" - here.

[Analysys Mason]: $2.3B Analytics Market in '14; SAS, IBM and Oracle Lead

A new report by Justin van der Lande, Principal Analyst, and Atul Arora, Analyst, Analysys Mason finds that "The analytics systems market generated USD2.3 billion in revenue worldwide during 2014"

Previous report (Sep. '14)showed revenues of $2.1B revenues for 2013, with expected CAGR of 12.9% (here).

Back to the current report:

• Vendors of general-purpose analytics tools have increased their efforts to provide solutions for communications service providers (CSPs)
   
• Every major telecoms OSS/BSS vendor has developed a big data analytics strategy, mostly based on Hadoop technologies
   



SAS Visual Analytics

• North American CSPs continued to account for the largest proportion of telecoms spending on analytics systems.

• SAS Institute provides customer insight solutions for marketing departments within CSPs and is building on this core competency to expand installations to support new use cases
   
• IBM is closing on SAS’s position as market leader. Its acquisition of The Now Factory has given it additional capabilities specifically for CSPs. IBM is fuelling growth by addressing non-telco-specific requirements.
   
• Oracle’s core analytics capabilities continue to provide key functionality within CSPs. Its products support streaming data, data storage and a bundle of pre-defined use cases.

See "Analytics software systems: worldwide market shares 2014" - here.

[Analysys Mason]: Will OTT VoIP Replicate the Success of OTT Messaging?

A new report by Patrick Rusby, analyst and Stephen Sale [pictured], Principal Analyst, Analysys Mason finds that "VoIP apps will probably not replicate the success of OTT messaging apps because the use case for OTT voice services is less clear"

Other findings:

Kik App

• "Penetration of OTT messaging (IP or social messaging), voice and video calling services varies significantly by country OTT messaging was the most commonly adopted category of OTT service, because it offers an improved user experience compared with SMS, at zero or minimal cost 

• Penetration of VoIP on mobile handsets remains relatively low in Europe and the USA. In contrast to messaging, VoIP apps have not been able to offer a significantly differentiated user experience or price advantage for domestic calling
   
• In Europe and the USA, Facebook Messenger, Skype and WhatsApp Messenger, the three dominant apps, were each used by over 30% of OTT messaging users in these regions. The market is characterised by a long tail of niche apps that appeal to specific groups, often based on age, and often within a specific country – for example, Kik in the USA and Snapchat in the UK". 

See "The Connected Consumer Survey 2015: OTT communication services"- here.

[Analysys Mason]: Smartphone Traffic Uses Wi-Fi (81%) and Generated at Homes (90%)

A new report by Martin Scott [pictured], Practice Head, and Aris Xylouris, Research Analyst, Analysys Mason analyses the smartphone usage of consumers in France, Germany, the UK and the USA.

The finds that "19% of all smartphone traffic observed in the panel was carried over the cellular network. LTE will make cellular networks more attractive relative to Wi-Fi, but we still expect the proportion of total smartphone traffic carried over the cellular network to decline to 16% by 2019. The volume of data will grow significantly on both types of network

.. 90% of panellists’ Wi-Fi traffic that we were able to categorise and identify came from home Wi-Fi connections and 89% of panellists connected to such networks. This is not necessarily a single residential connection – for example, many people connected to multiple home Wi-Fi networks, presumably those of friends and family.

Also:

• Beyond the home, the narrative is more fragmented – 60% of consumers connected to operator-branded hotspots (for example, AT&T, BT or O2 hotspots that were not also branded as community Wi-Fi), but this accounted for only 2.1% of all Wi-Fi traffic generated. The greatest value of such hotspots, it seems, is not generally in easing the congestion of particular macrocells, but in reinforcing brand presence and improving QoE in areas with poor cellular data performance. 

• The role of tethering is a complex part of an operator’s strategy and can, in some situations, help (with the generation of further monetisable traffic) and sometimes hinder (when the tethering is used instead of higher-priced dedicated tariffs).[The chart above] indicates tethering where the smartphone was not the cellular bearer – the cellular connection was shared from either a Mi-Fi device, a tablet or another smartphone.

See "Consumer smartphone usage 2014: mobile data usage" - here.

[Analysys Mason]: Fixed Broadband Consumers Buy on Price; VAS Increases ARPU

A new report by Aris Xylouris, Research Analyst, and Martin Scott [pictured], Practice Head, Consumer Services Research, Analysys Mason analyzes the ".. approaches that fixed operators are taking to promote superfast broadband in their respective markets".

According to the report "Consumers are reluctant to pay a premium for faster speeds [see chart below]. This, combined with the lack of clear applications for high bandwidth services for many users, diminishes potential consumer interest in superfast broadband

Consumers’ expectations of the quality of experience tend to increase along with advertised speeds, which can lead to dissatisfaction with the service for users on top-level speeds."

Criteria consumers intend to use when selecting their next fixed broadband service, by age range

"Operators should supplement superfast broadband offers with value-added services (VAS). They can charge more for such bundles, and this can increase ARPU. Services that benefit from higher access speeds – such as multi-screen TV and video-on-demand (VoD) services – are the best candidates. Services such as these will enable operators to compete with over-the-top (OTT) players, and monetise customers’ online media usage more effectively".

Percentage of tariffs that include value-added services,
 by download speed and service type, Europe, 4Q 2014

See "Multi-play pricing benchmark 4Q 2014: superfast broadband pricing and marketing strategies" - here.

[Analysys Mason]: S/W Professional Services Boosted due to OSS/BSS Transformations

A new report by Shanthi Ravindran, Senior Analyst, Glen Ragoonanan, Principal Analyst, and Gorkem Yigit, Research Analyst, Analysys Mason finds that "The worldwide market for telecoms software professional services (TSPS) was USD53.75 billion in 2013. 

• The top-six suppliers (unchanged since 2011) accounted for 36.5% of the USD53.75 billion market in 2013
    
• Many communications service providers (CSPs) deployed LTE networks and conducted OSS/BSS transformations for analytics and customer experience management (CEM) in 2013. This boosted vendors’ TSPS revenue because CSPs outsourced TSPS to reduce in-house tasks and costs
   
• Nokia Networks dropped to sixth position because it terminated several unprofitable TSPS deals
    
• Huawei moved up to third position thanks to winning managed services deals abandoned by Alcatel-Lucent and Nokia
   
• Vendors (NEPs, ISVs and IT suppliers) benefited from CSPs using more commercial off-the-shelf solutions (COTS) than systems integration (SI) in transformation projects, which boosted product-related services revenue.

See "Telecoms software professional services: worldwide market shares 2013" - here.

[Analysys Mason]: Telco S/W Market to Reach $34.2B in 2018

A new report by Analysys Mason finds that (see also "[Anaylsys Mason]: Ericsson and Amdocs Led the Telecom Software Market in 2013" - here]:

• The worldwide telecoms software market is forecast to grow from USD25.1 billion in 2013 to USD34.2 billion in 2018, at a CAGR of 6.4%.
   
• LTE network upgrades worldwide are driving spending in OSS/BSS. Investments in North America (NA) and Western Europe will decline initially as deployments are completed, but software revenue will be sustained over the forecast period by increased spending in emerging markets.
   
• The service delivery platform (SDP) market is the fastest-growing telecoms software segment, at a CAGR of 10.1%, driven by take-up and usage of mobile data services.
   
• Network function virtualisation (NFV) will begin to impact the industry during the mid-to-late forecast period, driving the need for new OSS/BSS solutions that can support both the virtualised and traditional network environments.
  

See "Telecoms software: worldwide forecast 2014–2018" - here.

[Analysys Mason]: Analytics S/W Market for CSPs to Reach $3.8B in 2018

A new report by Justin van der Lande [pictured], Principal Analyst, and Atul Arora, Analyst, Analysys Mason finds that "The worldwide analytics software market for telecoms service providers is forecast to grow from USD2.1 billion in 2013 to USD3.8 billion in 2018, at a 12.9% compound annual growth rate (CAGR). 

Communications service providers (CSPs) need to increase average revenue per user (ARPU) and decrease churn, and this is driving the most significant innovations in the use of analytics software solutions. We expect CSPs to increasingly use analytics tools in, or to inform, all customer interactions".

• NA is the largest user of analytics tools driven by market maturity and the need for innovative marketing to maintain market share. New technology such as software-defined networks will also drive uses of analytics to provide dynamic optimisation of network functions.
    
• Revenue in LATAM will grow, but the region will lose out to other faster-growing regions, such as APAC, and will experience a decline in the overall market share.
   
• Revenue in the EMEA region will grow, as CSPs in the mature markets of Western Europe invest in more-sophisticated analytics tools to maintain market share and optimise network assets.
   
• APAC’s share of revenue will grow the fastest, driven by underlying telecoms market growth of subscribers and service revenue, a high level of innovation and roll-out of new services particularly LTE.

See "Analytics software solutions: worldwide forecast 2014–2018" - here,

[Anaylsys Mason]: Ericsson and Amdocs Led the Telecom Software Market in 2013

A recent report by Glen Ragoonann and Justin Van Der Lande, Principle Analysts, Dean Ramsay, Analyst, and Mark H. Mortensen [pictured], Practice Head, BSS, Analysys Mason finds that "The value of the worldwide telecoms software market grew by 7.0% (or USD1.6 billion) between 2012 and 2013, from USD23.1 billion to USD24.8 billion. The overall market is still highly fragmented: the top-six suppliers accounted for just 48.6% of the market, and no supplier had a share of more than 12.0%."

• Ericsson increased its leading market share position in 2013 as it continued to integrate the ConceptWave Software and Telcordia Technologies product lines into its OSS/BSS solution sets and expand its contracts with Tier 1 and 2 communications service provider (CSP) customer
   
• Amdocs’ revenue growth was slightly below the market average and the rates achieved by the other top four vendors. However, it remained strong in revenue management and service fulfilment, and maintained its second-place position in the overall telecoms software market.
   
• Strong growth in the network management system (NMS) and SDP segments has increased Huawei Technologies’ market share to 9.6%.
    
• Oracle continued to increase its share, driven by the integration of its service fulfilment and BSS (notably Siebel CRM) products, and to capitalise on its strong brand in emerging markets. Oracle’s revenue is growing at a higher rate than any of the other top-six vendors.
   
• Alcatel-Lucent and Nokia Solutions and Networks (NSN) both lost market share following another challenging year of flat revenue in a growing market. NSN’s loss is largely the result of the sale of its BSS unit to Redknee.

See "Telecoms software: worldwide market shares 2013" - here. 

[Analysys Mason]: NMS Market to Reach $5.6B by 2018; Driven by LTE

A new report by Shanthi Ravindran [pictured], Senior Analyst, Gorkem Yigit, Research Analyst and Glen Ragoonanan, Principal Analyst, Analysys Mason finds that "The worldwide network management systems (NMS) market is forecast to grow from USD4.6 billion in revenue in 2013 to USD5.6 billion in 2018, at a 3.9% CAGR, starting to recover from the 4% decline in 2012 and 2% growth in 2013". 

These are much lower numbers than forecasted in the past by the Analysys Mason team.

2 years ago, they saw a $6.4B for 2016 (see "[Analysys Mason]: NMS Market - $4.7B in 2011, $6.4B in 2016" - here], and compare the two charts below:

"LTE roll-outs will still be the major driver of mobile NMS investments, followed by network upgrades and small cell deployments in the mature LTE networks. TD-LTE spending in emerging Asia–Pacific (APAC) – particularly China and India – will compensate for the decline in LTE spend in developed APAC.

Video, new digital services (such as home security and m-health) and small cells will sustain residential broadband NMS revenue at a low rate of growth, while national broadband network (NBN) FTTx spending, which has been focused in APAC,
declines".

Note the position of SDN and NFV as both drivers and inhibitors (see chart below).

See "NEPs' network management systems: worldwide forecast 2014–2018" - here.

[Analysis Mason]: Telco Big Data Analytics Market to Reach $2.3B in 2014

A new report by Justin van der Lande [pictured], Principal Analyst, Analysis Mason covers the big data analytics market for telcos - "Big data analytics (BDA) is not just a passing trend; it is becoming an increasingly important part of every aspect of a communications service provider’s (CSP) operations. The drive for efficiency gains, coupled with the need to personalize customers’ experiences, is driving new installations".

"Analysys Mason estimates the size of the analytics market in the telecoms sector to be US$2.1 billion in 2013, and market growth is expected to be near 9% in 2014. The market is heavily biased towards the developed markets of North America and Western Europe, as depicted in Figure 2. This market size includes only the analytics software and associated visualization functions, and tools for extracting, loading and transforming (ELT) data into an infrastructure and schemas specifically built for the telecoms sector".

"New vendors continue to enter the BDA markets, encouraged by the growing demand by CSPs and the availability of new, low-cost technology that is open source and is increasingly accepted by CSPs. Vendors are categorized into four types based on their history and current capabilities, which provide different view-points on open source and their access to the CSPs. These categories are storage vendors, general-purpose analytics vendors, specialist vendors and new telecoms-specific analytics vendors"

See "The future of big data analytics in the telecoms industry" - here.

[Analysys Mason]: Oracle and Amdocs Lead the $3.6B Customer Care Market

A new report by Mark H. Mortensen [pictured], Practice Head, BSS, and Atul Arora, Research Analyst, Analysys Mason finds that "The customer care market generated USD3.58 billion in revenue in 2013, an increase of 9.1% from 2012. The market was driven by communications service providers (CSPs) increasingly offering packaged service bundles, consumer demand for self-service and control over their accounts, and the need of CSPs to increase customer satisfaction (thereby reducing churn), bring many new digital services to market quickly and reduce customer support costs.

Oracle and Amdocs continue to dominate the market, with a combined market share of more than one third of the worldwide market, while China-based vendor Huawei Technologies dominates its domestic market. However, more than 60 suppliers that constitute the ‘Other’ category command revenue of several hundred million dollars in this market, many of them smaller, geographically focused suppliers.

Customer care systems were originally ‘add-ons’ to billing systems and provided the basic functions of ordering and supporting CSRs in answering queries from subscribers. Billing system vendors still provide these functions as subscriber management systems. However, CRM systems have grown in importance, providing advanced features to CSRs (and customers through other channels) as well as access to the subscriber management system functions.

See "Customer care systems: worldwide market shares 2013" - here.

[Analysys Mason]: SDP Market (Incl. PCC) Generated $5.2B in 2013

According to a new report by Glen Ragoonanan [pictured], Principal Analyst, and Gorkem Yigit, Research Analyst, Analysys Mason "The service delivery platforms (SDP) market generated USD5.2 billion in revenue worldwide during 2013, up 12% from USD4.6 billion in 2012. In 2013, communications service providers (CSPs) spent on service delivery platforms (SDP) solutions to monetise LTE and FTTx infrastructure investments. Voice (IMS/VoLTE) and video (multi-screen) services also continued to drive CSPs’ SDP spending as they compete with over-the-top (OTT) providers. 

Analysis Mason's SDP refers to "four application sub-segments: telecoms application servers (TAS), content management and delivery (CMD): fixed (FCMD) and mobile (MCMD), policy management (PM) and subscriber data management (SDM)"


The top-five suppliers in this market were the same as in 2012, thanks to numerous acquisitions. Ericsson maintained its leadership, followed by Huawei Technologies, Nokia Solutions and Networks, Alcatel-Lucent, and then Oracle.

According to the above charts, vendors' revenues for 2013 (subject to rounding errors) have been:

See "Service Delivery Platforms: Worldwide Market Shares 2013" - here.

[Analysys Mason] CSPs Spent 6.3% of Revenues on IT (39% of Capex)

A new report by Dean Ramsay, Larry Goldman [pictured] and Justin van der Lande, Analysys Mason finds that "USD127 billion was spent worldwide on telecoms IT in 2012. This spending represented an average of 6.4% of overall telecoms revenue of more than USD2 trillion .. IT spending accounted for only 10% of opex and 39% of capex worldwide in 2012".

"Spending on OSS/BSS accounted for 50% of IT spending worldwide – USD63 billion in 2012, up by 3% year-on-year. Just over one third of IT spending in 2012 (USD48 billion) was spent by the CTO or network/product group, on SDPs and apps, and on network management systems (NMSs)".

See "IT spending by communications service providers worldwide 2012" - here.

[Analysys Mason]: Is there Correlation Between Fixed Internet and Mobile Data Usage?

   

A new report by Rupert Wood [pictured], Principle Analyst, Analysys Mason, finds that "About 96% of all IP data worldwide is associated with fixed access networks .. 

There is little immediately obvious correlation between fixed Internet and mobile data usage among these countries. We have added countries for which we have clear data in mobile usage (shown with pink markers below), but have only some operator-level data for fixed. 

Again, there are more exceptions to explain away than there are clear patterns. In only one of these countries, Japan, does cellular traffic exceed 10% of total data traffic. In three (France, Germany and Romania) mobile is less than 2.5% of the total".

"The worldwide median data usage worldwide was about 14GB per month at 2013, and the median connection had no on-net usage. The median as a proportion of the mean will shrink over the period of the forecast in most economies. Taking Western Europe as an example, it will decline from 37% of the mean in 2013 to 29% of the mean by 2019. The reasons for this are bound up with the sudden changes to subscriber usage that the introduction of IPTV set top boxes for catch-up and VoD".

See "Fixed network data traffic worldwide: forecasts and analysis 2014–2019" - here.

[Analysys Mason]: Business Models for Application-based Pricing

As it seems that the FCC is considering more flexible Net Neutrality rules (see "FCC Chairman re-defines Net Neutrality: 'we're going to see a two-sided world'" - here), it is time to evaluate the business models for the relations between the customers, carriers and OTT content providers.

A new report by Ronan de Renesse, Principal Analyst, Glen Ragoonanan, Senior Analyst, Eva Weidinger [pictured], Research Analyst, and Anil Rao, Analyst, Analysys Mason on Application Based Pricing, finds that "The fact that consumers generally do not pay for content and apps is a fundamental consideration when deploying ABP solutions and exploring the underlying business models".

  

"Operators need to consider innovative tariffs to maintain ARPU and remain competitive as mobile data prices and per-user spending on digital content decline. Application-based pricing (ABP) is the inclusion of third-party content and services (applications) as part of tariff structures. ABP helps operators and over-the-top (OTT) players to further monetise consumer demand for popular apps on mobile devices. Apps drive smartphone adoption, and generate mobile data traffic, which in turn generates mobile data revenue for operators"

".. three typical business models, which are based on examples of exclusivity agreements:

• Fixed rate: the operator pays the OTT player a fixed rate, as per the Deutsche Telekom and Spotify agreement [see "DT to Offer Zero-Rate Video Calls, Messaging, File sharing and Music Services" - here]
   
• Revenue-sharing: the OTT pays the operator a share of revenue, as per Telefónica Digital and Aurasma‟s partnership.
   
• No-one pays, as per agreements between Facebook and dtac Thailand (part of Telenor), [see "Facebook Offers Free Messaging Through 18 MNOs" - here] as well as SingTel and WhatsApp".

See "Application-based pricing: opportunities, business models and case studies" - here.